Morning bid Americas: Cash burnout
SPY•Concerns about AI cash burn intensified after Alphabet reported disappointing search advertising results and negative free cash flow, Amazon disclosed $42.4 billion in trailing 12-month cash burn, and Intel fell more than 20% after-hours. Central banks largely held or raised rates as energy prices and geopolitical risks remained in focus.
1. AI spending concerns
AI-related funding announcements and earnings initially lifted chip stocks and hyperscalers, but investor concerns about cash burn mounted. Alphabet shares fell more than 12% after disappointing search advertising results and negative free cash flow. Amazon reported $42.4 billion in trailing 12-month cash burn in the third quarter, largely due to capital spending about $20 billion above estimates, while Intel fell more than 20% after-hours amid heavy spending, weaker PC demand and capacity constraints.
2. Central banks and energy
The Reserve Bank of New Zealand held its rate at 2.75%, against market expectations for a hike, while the Bank of Canada raised its policy rate by 25 basis points to 2.5%. The European Central Bank, Federal Reserve and Bank of Japan held rates, while signalling possible tightening. Brent crude rose above $117 a barrel on Friday as concerns persisted about possible US and Israeli strikes on Iran after the US midterm elections.
3. Elections and upcoming data
Brazilian President Luiz Inacio Lula da Silva won a fourth term, and Brazilian assets fell on Monday. In the United States, midterm elections and October nonfarm payrolls are due next week; Apple, AMD and Palantir are also scheduled to report earnings.
